THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt as to the course of action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately.

If you have sold or transfer all your shares in Guan Chong Berhad, you should at once hand this Circular to the agent through whom you effected the sale or transfer for immediate transmission to the purchaser or the transferee.

Bursa Malaysia Securities Berhad takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss however arising from or in reliance upon the whole or any part of the contents of this Circular.

GUAN CHONG BERHAD

B E R H A DB E R H A D

(Company No. 646226-K)(Incorporated in Malaysia under the Companies Act, 1965)

CIRCULAR TO THE SHAREHOLDERS

IN RELATION TO THE

PROPOSED RENEWAL OF EXISTING SHAREHOLDERS' MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE;

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY;

AND

EXTRACT OF THE NOTICE OF THE THIRD ANNUAL GENERAL MEETING

The Notice of the Third General Meeting of the Company to be convened and held at Sri Banang 2, 2nd Floor, Mutiara Hotel, Jalan Dato Sulaiman, Taman Century, K.B. No. 779, 80990 Johor Bahru, Johor on Friday, 22 June 2007 at 11:00 a.m. or at adjournment thereof, together with the Proxy Form, are enclosed in the Annual Report 2006 of the Company.

The Proxy Form must be completed and lodged at the Company's Registered Office, at No. 8 (1st Floor), Jalan Pesta 1/1, Taman Tun Dr. Ismail 1, Jalan Bakri, 84000 Muar, Johor, not less than forty-eight (48) hours before the time stipulated for holding the meeting or any adjournment thereof. The lodging of the Proxy Form will not preclude you from attending and voting in person at the meeting should you subsequently decide to do so.

This Circular is dated 31 May 2007

DEFINITIONS

Unless otherwise indicated the following abbreviations shall apply throughout this Circular:-

Act : The Companies Act, 1965 or any statutory modification, amendment or re-enactment thereof for the time being in force

AGM : Annual General Meeting to be convened by GCB on 22 June 2007

Board or Board of Directors : The Board of Directors of the Company

Bursa Securities : Bursa Malaysia Securities Berhad

Directors :

EGM : Extraordinary General Meeting convened by GCB on 20 June 2006

EM : Enrich Mix Sdn Bhd (593768-K)

FYE : Financial year ended 31 December

GCC : Guan Chong Cocoa Manufacturer Sdn Bhd (133057-U)

GCT : Guan Chong Trading Sdn Bhd (124042-P)

Listing Requirements : Listing Requirements of Bursa Securities

Major Shareholder :

The mandate period for the Proposed Renewal of Shareholders' Mandate commencing from the date of the AGM until:-

(i)

Mandate Period :

the conclusion of the next annual general meeting of GCB following the general meeting at which the resolution for such mandate has been passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed;

A person who has an interest or interests in one or more voting Shares in GCB and the nominal amount of that Share, or the aggregate of the nominal amount of those Shares, is not less than 5% of the aggregate of the nominal amount of all voting shares in the Company and includes person who is or was within the preceding 12 months of the date on which the terms of the transaction were agreed upon. For the purpose of this definition, "interest in Shares" shall have the meaning given in Section 6A of the Act

The Directors of GCB for the time being, and shall have the same meaning given in Section 4 of the Act and includes any person who is or was within the preceding 12 months of the date on which the terms of the Recurrent Related Party Transactions were agreed upon, a Director of GCB (or any other company which is its subsidiary or holding company or a subsidiary of its holding company)

i

DEFINITIONS (Con’t)

(ii)

(iii)

whichever is the earlier

NA : Net assets

Proposals : Proposal Renewal of Shareholders’ Mandate and Proposed Amendments

Proposed Amendments : Proposed amendments to the Articles of Association of the Company

Proposed Renewal of : Proposed renewal of existing shareholders’ mandate Shareholders’ Mandate for Recurrent Related Party Transactions to be entered

into

by the GCB Group during the Mandate Period

Recurrent Related Party : Recurrent related party transactions of a revenue or trading Transactions nature which are necessary for the day to day operations

of

the GCB Group

Registered Office : No. 8 (1st Floor), Jalan Pesta 1/1, Taman Tun Dr. Ismail 1, Jalan Bakri, 84000 Muar, Johor

Related Party(ies) : Director(s), Major Shareholder(s) or person(s) connected with such Director(s) or Major Shareholder(s)

Related Party Transactions

:

:

:

:

: Transaction(s) entered into by GCB or its subsidiaries which involves the interest, direct or indirect, of a Related Party

ii

Ringgit Malaysia and sen respectively

Securities Commission

Guan Chong Berhad (646226-K)

GCB and its subsidiaries, collectively

Ordinary shares of RM0.25 each in GCB

RM and sen :

SC

GCB or the Company

GCB Group or Group

GCB Share(s) or Share(s)

the expiration of the period within which the annual general meeting of the Company after the date it is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

revoked or varied by resolution passed by the shareholders in a general meeting,

Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. Reference to persons shall include corporation.

TABLE OF CONTENTS

DIRECTORS’ LETTER TO THE SHAREHOLDERS OF GCB CONTAINING: 1.0 INTRODUCTION 1-2 2.0 DETAILS OF THE PROPOSALS

2.1 Proposed Renewal of Shareholders’ Mandate

A. Provisions under the Listing Requirements 3

B. Background Information of the GCB Group 4

C. Classes and Nature of the Recurrent Related Party Transactions 4

D. Proposed Renewal of Shareholders’ Mandate 5-6

E. Rationale for the Proposed Renewal of Shareholders’ Mandate 7

F. Benefits of the Recurrent Related Party Transactions 7

G. Financial Effects of the Proposed Renewal of Shareholders’ Mandate 7

H. Basis of estimates 8

I. Review Procedures and Disclosure of the Recurrent Related Party 8-9 Transactions

J. Statement by the Audit Committee 9 2.2 Proposed Amendments

A. Details of the Proposed Amendments 9 B. Rationale for the Proposed Amendments 9 C. Effects of the Proposed Amendments 9

3.0 CONDITIONS FOR THE PROPOSALS 9-10 4.0 INTERESTS OF THE DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED TO THEM 10 5.0 DIRECTORS’ RECOMMENDATION 10 6.0 ANNUAL GENERAL MEETING 10 7.0 ADDITIONAL INFORMATION 11 APPENDICES APPENDIX I – FURTHER INFORMATION 12-13 APPENDIX II – PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION 14-22 APPENDIX III – EXTRACT OF THE NOTICE OF THE THIRD ANNUAL GENERAL MEETING 23-24

Page

GUAN CHONG BERHAD(Company No. 646226-K)

(Incorporated in Malaysia under the Companies Act, 1965)

Registered Office:- 8 (1st Floor), Jalan Pesta 1/1

Taman Tun Dr. Ismail 1, Jalan Bakri 84000 Muar

Johor

31 May 2007

Board of Directors ::Y Bhg Dato Dr. Mohamad Musa Bin Md. Jamil (Executive Chairman)

Tay Hoe Lian (Brandon) (Managing Director)

Tay How Sik @ Tay How Sick (Executive Director)

Hia Cheng (Executive Director)

YB Senator Tay Puay Chuan (Independent Non-Executive Director)

Y Bhg Dato’ Dr. Omar @ S Omar Bin Abdul Rahman (Independent Non-Executive Director)

Tey Chi @ Tay Chin Chuan (JP) (Alternate Director to Tay Hoe Lian)

Tay How Yeh (Alternate Director to Tay How Sik @ Tay How Sick)

To: The Shareholders of Guan Chong Berhad

Dear Sir/Madam

GUAN CHONG BERHAD (“GCB” or the “Company”)

• PROPOSED RENEWAL OF EXISTING SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE AND TRADING NATURE

• PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

1.0 INTRODUCTION

The Company had on 20 June 2006 obtained its shareholders’ mandate for the GCB Group to enter into Recurrent Related Party Transaction which are necessary for the GCB Group’s day-to-day operations and which are in the ordinary course of business. The said shareholders’ mandate shall, in accordance with the Listing Requirements, lapse at the conclusion of the forthcoming AGM of the Company unless approval for its renewal is obtained from the shareholders of the Company at the AGM.

The Board of Directors had on 7 May 2007 announced to Bursa Securities its intention to seek approval of shareholders to:(i) renew the existing shareholders’ mandate for Recurrent Related Party Transactions

to be entered into by the GCB Group from the AGM to the next AGM; and(ii) amend the existing Articles of Association of the Company.

1

In connection to the item (i), GCB had on 18 May 2007, made an application to Bursa Securities

to seek its approval for extension of time to enable it to obtain its shareholders' approval on the

Proposed Renewal of Shareholders' Mandate ("Application"). Subsequently, on 23 May 2007,

Bursa Securities had vide its letter dated 23 May 2007 approved the Application and stated that

GCB is required to comply with the disclosure obligation in relation to the Recurrent Related Party

Transactions as set out in Paragraph 2.0 of the Practice Note 12/2001 of the Listing

Requirements.

The purpose of this Circular is to provide you with relevant information on the Proposals, to set out

your Board's recommendation and to seek your approval for the resolutions to be tabled at the

forthcoming AGM of the Company. An extract of Notice of the Third AGM, is set out in this

Circular. The Proxy Form is enclosed in the Annual Report 2006 of the Company.

SHAREHOLDERS ARE ADVISED TO READ THE CONTENTS AND APPENDICES OF THIS

CIRCULAR CAREFULLY BEFORE VOTING ON THE RESOLUTIONS PERTAINING TO THE

PROPOSALS AT THE FORTHCOMING AGM OF THE COMPANY.

[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

2

2.0 DETAILS OF THE PROPOSALS

2.1 PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE

A. Provisions under the Listing Requirements

Pursuant to Paragraph 10.09 of the Listing Requirements, listed issuers may seek

its shareholders’ mandate in respect of the Recurrent Related Party Transactions,

which are necessary for the company’s day-to-day operations subject to, inter-alia,

the following:

(i) the transactions are in the ordinary course of business and are on terms not

more favourable to the related party than those generally available to the

public;

(ii) the shareholders’ mandate is subject to annual renewal and disclosure is

made in the annual report of the aggregate value of transactions conducted

pursuant to shareholders’ mandate during the financial year;

(ii) the issue of a circular to shareholders for the shareholders’ mandate

containing information as specified in the Listing Requirements; and

(iii) in a meeting to obtain shareholders’ mandate, the interested director,

interested major shareholder or interested person connected with a director

or major shareholder; and where it involves the interest of an interested

person connected with a director or major shareholder, such director or

major shareholder, must not vote on the resolution approving the

transactions. An interested director or interested major shareholder must

ensure that persons connected with him abstain from voting on the

resolution approving the transactions.

In order to comply with Paragraph 10.09 of the Listing Requirements, the Board of

Directors hereby seeks its shareholders’ approval for the Proposed Renewal of

Shareholders’ Mandate (as set out in Section 2 of this Circular). These Recurrent

Related Party Transactions are in the ordinary course of business with the Related

Parties are in the ordinary course of business and are on terms which are not more

favourable to the Related Parties involved than generally available to the public and

are not detrimental to the minority shareholders of GCB.

3

B. Background information of the GCB Group

GCB is principally an investment holding company whilst the principal activities of its subsidiaries, all of which were incorporated in Malaysia, are as follows:-

Effective EquitySubsidiary Interest (%) Principal Activities

GCC 100.0 Producing cocoa-derived food ingredients

GCT 100.0 Buying and selling of cocoa

beans

EM 51.0 Producing blended cocoa-

derived food ingredients

GCBF 94.0 Producing and marketing of

cocoa related products

C. Classes and Nature of the Recurrent Related Party Transactions

The Recurrent Related Party Transactions are principally in respect of the following:-

(i)

4

Category I - Sales to Related Parties

The Related Parties, namely SMC Food 21 Pte Ltd ("SMC") acts as indirect distribution channel of the GCB Group in Japan (i.e. the GCB Group will sell its products to SMC who will then sell these products to sub-distributors or end users in Japan). Products sold by the GCB Group include cocoa powder, cocoa liquor and cocoa butter.

SMC is a private limited company incorporated in Singapore with the core business as producer of blended food ingredients. The products of the GCB Group constitute only part of the range of products sold by SMC.

The core business of GCB is in the manufacturing of high quality cocoa-derived food ingredients, namely cocoa liquor, cocoa butter, cocoa cake and cocoa powder and cocoa related products, and supported by trading activities of such products.

Category II - Purchases from Related Parties

The purchases from Related Parties, namely SMC are mainly raw sugar, which are used for the manufacturing activities of the GCB Group as noted in Section 2.1 (B) above.

(ii)

D. P

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6

E Rationale for the Proposed Renewal of Shareholders’ Mandate

F. Benefits of the Recurrent Related Party Transactions

(i)

(iii)

(ii)

7

The Related Parties, who have established the extensive network in Japan, are the distributors of the products of the GCB Group. The GCB Group would be able to reduce its marketing costs as well as capitalize on the extensive network of the Related Parties as its direct and indirect distribution channels to market the Group's products; and

Where the Recurrent Related Party Transactions involve the supply of goods from the Related Parties, the GCB Group is expected to benefit in terms of costs effectiveness and administrative efficiency in its procurement process. For instance, the GCB Group does not keep a high level of inventories and when there is an urgent need for certain raw materials from the Related Parties on a prompt basis, which will translate into additional income/revenue to the GCB Group.

The Recurrent Related Party Transactions entered or to be entered into by the GCB Group are all in the ordinary course of business and intended to meet the business needs of the GCB Group at the best possible terms so as to achieve synergistic benefits within the GCB Group. As such, it is anticipated that the Recurrent Related Party Transactions would occur on a frequent and recurrent basis;

The Proposed Renewal of Shareholders' Mandate will enable the GCB Group to continue to carry out recurrent transactions necessary for the Group's day-to-day operations and enhance the Group's ability to pursue business opportunities which are time-sensitive in nature in a more expeditious manner. They will eliminate the need to announce and convene separate general meetings from time to time to seek shareholders' approval as and when potential recurrent transactions with a Related Party arise. This will substantially reduce expenses associated with the convening of such meetings on an ad hoc basis, improve administrative efficiency and allow human resources and time to be channeled towards attaining other corporate objectives and opportunities.

Further, the Proposed Renewal of Shareholders' Mandate is intended to facilitate transactions entered and to be entered into in the ordinary course of business of the GCB Group which are transacted from time to time with the Related Parties which are carried out at arm's length on the Group's normal commercial terms and are not prejudicial to the interest of the shareholders of GCB and on terms not more favourable to the Related Parties than those generally available to the public and are not detrimental to the minority shareholders of GCB.

The Proposed Renewal of Shareholders' Mandate will not have any effects on the issued and paid-up share capital and the shareholding of the substantial shareholders of GCB.

The Proposed Renewal of Shareholders' Mandate will not have any material effect on the consolidated net assets and the consolidated earnings of GCB.

G. Financial Effects of the Proposed Renewal of Shareholders' Mandate

The benefits of the Recurrent Related Party Transactions to the GCB Group are as follows:-

H. Basis of estimates

I. Review Procedures and Disclosure of the Recurrent Related Party Transactions

(i)

(ii)

(iii)

(iv)

(v)

8

The above mentioned estimated value in respect of each transaction referred to above are based on prevailing prices obtained from the Related Parties which are reasonably market-competitive prices and are derived from the sums incurred or received during the past year, based on the normal level of transactions entered into by the GCB Group. The estimated amounts are further based on the assumptions that current level of operations will continue and all external conditions remain constant.

The Directors of GCB propose the following measures to ensure the Recurrent Related Party Transactions are undertaken on an arm's length basis and on normal commercial terms consistent with the Group's usual business practices and policies, which are not more favourable to the Related Parties than those extended to third parties or public and are not prejudicial to the minority shareholders:

The interested Directors and Major Shareholders will be informed and briefed by the GCB Group of the procedures put in place by the management of the GCB Group in relation to transactions to be entered between the GCB Group and the Related Parties, where the interested Directors and Major Shareholders are required to declare and disclose to the Board in a timely manner on transactions in which they are deemed interested, if any;

All records pertaining to Recurrent Related Party Transactions will be analysed and reviewed by the management of the GCB Group. In addition, the management of the GCB Group will report to the Audit Committee the status of the Recurrent Related Party Transactions transacted;

The transactions prices shall be based on prevailing market prices that are agreed upon under similar commercial terms of transactions with third parties, business practices and policies and on terms which are generally in line with the industry norms. The management of the GCB Group will ensure that these transactions will be conducted on terms not more favourable to the Related Parties than those generally available to the public;

An audit shall be conducted on transactions with the Related Parties entered into pursuant to the Proposed Renewal of Shareholders' Mandate to ensure that such transactions are undertaken at arm's length, on commercial terms which are not more favourable to the Related Parties than those generally available to the public, not detrimental to the minority shareholders and are in the best interest of the GCB Group;

The Board and the Audit Committee shall undertake quarterly reviews on the internal audit reports and to establish that all transactions with the Related Parties have been undertaken in accordance with the procedures put in place by the management of the GCB Group; and

(vi)

J. Statement by the Audit Committee

2.2 PROPOSED AMENDMENTS

A. Details of the Proposed Amendments

Details of the proposed amendments to the Articles are set out in Appendix II of this Circular.

B. Rationale for the Proposed Amendments

C.

Effects of the Proposed Amendments

9

The Directors who have any interests in any Recurrent Related Party Transactions shall abstain from Board deliberation and GCB shall ensure that the interested Directors, Major Shareholders and persons connected to them are also abstained from voting on the resolution approving the transactions.

The Audit Committee of the Company has seen and reviewed the procedures mentioned in Section H above and is satisfied that the abovementioned review procedures, are appropriate to ensure that these Recurrent Related Party Transactions will be made at arm's length and is in accordance with the Group's commercial terms with third parties, business practices and policies and on terms generally in line with the industry norms, and hence, are not prejudicial to the interests of the shareholders or disadvantageous to the Group.

The rationale for the Proposed Amendments is primarily to update the Articles of Association of the Company to reflect the current provisions of the Listing Requirements and to ensure continued compliance with the Listing Requirements and other regulatory requirements. At the same time, the amended Articles of Association of the Company are intended to better facilitate the administration of the affairs of the Company and to provide clarity to the provisions of certain Articles.

The Proposed Amendment will not have any financial effects on the share capital, net assets, earnings, dividends or on the substantial shareholders' and directors' shareholdings of the GCB Group.

The Proposals are conditional upon approval being obtained from shareholders of the Company at the forthcoming AGM.

The Proposed Renewal of Shareholders' Mandate being procured from the shareholders of GCB shall only continue to be in force until:-

3. CONDITIONS FOR THE PROPOSALS

the conclusion of the AGM of GCB following the general meeting at which the resolution for the Proposed Renewal of Shareholders' Mandate has been passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; or

(i)

(ii)

(iii) revoked or varied by resolution passed by the shareholders in a general meeting,

whichever is the earlier.

4. INTERESTS OF THE DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS

CONNECTED TO THEM

5. DIRECTORS’ RECOMMENDATION

6. ANNUAL GENERAL MEETING

10

The AGM, the Notice of which is enclosed in the Annual Report 2006 of the Company and an extract of which is enclosed in this Circular, will be held at Sri Banang 2, 2nd Floor, Mutiara Hotel, Jalan Dato Sulaiman, Taman Century, K.B. No. 779, 80990 Johor Bahru, Johor on Friday, 22 June 2007 at 11:00 a.m. for the purpose of considering and if thought fit, passing the resolutions on the Proposals.

If you are unable to attend and vote at the AGM, you are requested to complete, sign and return the enclosed Proxy Form, which is set out in the Annual Report 2006 of the Company, in accordance with the instructions contained therein so as to arrive at the Registered Office of the Company not later than forty-eight (48) hours before the time fixed for the AGM or any adjournment thereof.

The lodging of the Proxy Form will not preclude you from attending and voting in person at the AGM should you subsequently wish to do so.

The Board, having considered all aspects of the Proposals, is of the opinion that the Proposals are in the best interests of the GCB Group and its shareholders and accordingly, recommends that you vote in favour of the resolutions in respect of the Proposals to be tabled at the AGM.

The interested Directors, if any will each abstain and will continue to abstain from all deliberations and voting on the Proposed Renewal of Shareholders' Mandate in relation to the Recurrent Related Party Transactions at all Board Meetings.

The interested Major Shareholders, if any will abstain from voting in respect of their respective shareholdings, direct or indirect in GCB on the ordinary resolution approving the Proposal Renewal of Shareholders' Mandate to be tabled at the AGM.

The interested Directors and Major Shareholders, if any will also undertake to ensure that persons connected to them will abstain from all deliberations and voting in respect of their respective shareholdings, direct and indirect in GCB on the ordinary resolution approving the Proposed Renewal of Shareholders' Mandate to be tabled at the AGM.

Save as disclosed in Section 2.1 (D), none of the other Directors and/or Major Shareholders or persons connected to them has any interest, direct or indirect, in the Proposals.

the expiration of the period within which the AGM after the date it is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

7. ADDITIONAL INFORMATION

Shareholders are requested to refer to the attached Appendices for further information.

Yours faithfully

For and on behalf of the Board of Directors of

GUAN CHONG BERHAD

Y BHG DATO DR. MOHAMAD MUSA BIN MD. JAMIL

Executive Chairman

[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

11

APPENDIX I

FURTHER INFORMATION

1. Directors’ responsibility statement

2. Material Contracts

(a)

(b)

(c)

3 Material litigation

12

This Circular has been seen and approved by the Directors of GCB and they collectively and individually accept full responsibility for the accuracy of the information given and confirm that after making all reasonable enquiries and to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement herein misleading.

Save as disclosed below, the GCB Group has not entered into any material contract, which are not contracts entered into in the ordinary course of business during the two (2) years immediately preceding the date of this Circular:-

A membership purchase agreement dated 10 February 2006 entered into between GCC or its assignee(s); William H. Wurster ("Wurster");and Carlyle Cocoa Co., LLC ("Carlyle"), a limited company formed under the laws of the State of Delaware, United States of America for the acquisition of 49% of Wurster's membership interest held in Carlyle for a total cash consideration of USD1,016,750.

A sale and purchase agreement dated 30 November 2006 entered into between GCT and Koko Malaysia Sdn Bhd (Receiver and Manager Appointed)("KMSB") for the acquisition of a piece of freehold industrial land measuring approximately 4.0469 hectares held under HS(D) 11035, Lot No. PT 1157, Mukim Teluk Bharu, Hilir Perak, Perak together with a factory building erected thereon and the plant and machinery for a total cash consideration of RM6,600,000.

A sale and purchase agreement dated 30 November 2006 entered into between GCT and KMSB for the acquisition of a piece of freehold land measuring approximately 1.113 hectares held under Parent Lot No. 4541, Mukim Teluk Bharu, Hilir Perak, Perak together with five (5) units of bungalow house for a total cash consideration of RM300,000.

The marine cargo insurance claim made by GCC against Malaysian Assurance Alliance Berhad ("MAA") by GCC for the damaged suffered on a shipment of bagged cocoa shipped on the vessel "Pratiwi" from Pantolon, Palu Indonesia to Pasir Gudang, Johor sometime in July 2001 was dismissed by the High Court on 15 May 2006.

However, GCC had filed an appeal notice to the Court of Appeal on 9 June 2006. As at todate, the matter is still pending for hearing.

Save as disclosed below, the GCB Group is not engaged in any litigation or arbitration, either as plaintiff or defendant which has a material effect on the financial position of the GCB Group, and the Directors of the Company have no knowledge of any proceedings pending or threatened or of any fact likely to give rise to any proceedings which might materially and adversely affect the financial position or business of the GCB Group:-

(i)

4. Documents for Inspection

The following documents (or copies thereof) are available for inspection at the Registered

Office of GCB at 8 (1st Floor), Jalan Pesta 1/1, Taman Tun Dr. Ismail 1, Jalan Bakri, 84000

Muar, Johor during normal business hours from Monday to Friday (except for public

holidays) from the date of this Circular up to and including the date of the forthcoming AGM:

(i) The existing Memorandum and Articles of Association of the Company and the

Proposed Amendments.

(ii) The audited consolidated financial statements of GCB for the past two (2) financial

years ended 31 December 2005 and 31 December 2006.

(iii) The material contracts referred to in Section 2 above.

(iv) The writs of material litigation referred to in Section 3 above.

[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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APPENDIX IIPROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The highlights of the proposed amendments to the Articles of Association (or “Articles”) of the Companyare as follows:-

No. Existing Articles Proposed Amended/New Articles

1 To amend and insert the following new definitions in the existing Article 2 -Definitions

Article 2 –“Approved Market Place A stock exchange which is specified to be an approved market place in the Securities Industry (Central Depositories)(Exemption)(No. 2) Order, 1998.”

“Central Depositories Act The Securities Industry (Central Depositories) Act, or any statutory modification, amendment or re-enactment thereof for the time being in force.

“Central Depository Malaysian Central Bursa Malaysia Depository Sdn. Bhd. (Company No. 165570-W)” “Deposited Security A security in the Company standing to the credit of a securities account of a Depositor subject to the provisions of the Central Depositories Act and the Rules Shall have the same meaning given in Section 2 of the Depositories Act.”

“Exchange Kuala Lumpur Stock Exchange Bursa Malaysia Securities Berhad (Company No.635998-W) and/or any other Exchange on which the Company is listed.”

“Rules The Rules of the Central Depository and any appendices thereto as they may be amended from time to time.”

“Securities Account An account established by a central Bursa depository for a depositor for the recording of deposit of securities and for dealing in such securities by the depositor.

“Securities laws The Securities Industry Act, 1983; the Securities Industry (Central Depositories) Act 1991; the Securities Commission Act 1993; and the Futures Industry Act 1993.”

“The term “Central Depository”, wherever it appears in this Articles of Association, shall be replaced with the term “Depository”.

The term “Malaysian Central Depository Nominees Sdn. Bhd.”, wherever it appears in this Articles of Association, shall be replaced with the term “Bursa Malaysia Depository Nominees Sdn. Bhd.”

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2 To amend the existing Article 4 – Allotment of shares

Article 4 - “… (e) every new issue of shares or options to employees and/or Directors of the Company and its subsidiaries shall be approved by the Members of the Company in general meeting and no Director shall participate in such issues of shares or options unless:- (i) the Members in general meeting have approved of the specific allotment to be made to such Director: and ...”

3 To amend the existing Article 5 - Rights of preference shareholders

(a) when the dividend or part of the dividend on the preference shares is in arrears for more than six (6) months;

(b) on a proposal to reduce the Company’s share capital; (c) on a proposal for the disposal of the whole of the

Company’s property, business and undertaking; (d) on a proposal that affects rights attached to the

preference shares; (e) on a proposal to wind up the Company; and (f) during the winding up of the Company.

The rights attaching to shares of a class other than ordinary shares shall be expressly set out in these Articles or provided by the terms of issue of such shares.”

4 Article 24 - "The transfer of any listed securities or class of listed securities of the Company which have been deposited with the Central Depository shall be by way of book entry by the Central Depository in accordance with the Rules and, notwithstanding Sections 103 and 104 of the Act, but subject to subsection 107C(2) of the Act and any exemption that may be made from compliance with subsection 107C(1) of the Act, ......"

To amend the existing Article 24 - Transfers

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Article 5 - "Subject to the Act, any preference shares may with the sanction of an ordinary resolution, be issued on the terms that they are, or at the option of the Company are liable, to be redeemed but the total nominal value of the issued preference shares shall not exceed the total nominal value of the issued ordinary shares at any time and the Company shall not issue preference shares ranking in priority above preference shares already issued, but may issue preference shares ranking equally therewith. Preference shareholders shall have the same rights as ordinary shareholders in relation to receiving notices, reports and audited accounts and attending general meetings of the Company. Preference shareholders shall also have the rights to vote at any meeting convened :-

5 To amend the existing Article 32A

Article 32A – “(1) Where :-

(a)

(b)

the Company shall, upon request of a holder of shares or other securities, permit a transmission of securities held by such holder of shares or other securities holder from the register of holders maintained by the registrar of Company in the jurisdiction of the Approved Market Place other stock exchange (hereinafter referred to as “the Foreign Register”), to the register of holders maintained by the registrar of Company in Malaysia (hereinafter referred to as “the Malaysian Register”) subject to the following conditions :- and vice versa provided that there shall be no change in the ownership of such securities.

(i) there shall be no change in the ownership of such shares or other securities; and

(ii) the transmission shall be executed by causing such shares or securities to be credited directly into the securities account of such holder of shares or other securities (as may be applicable).

(2) For the avoidance of doubt, where the Company fulfils the requirements of sub-paragraphs (a) and (b) of Article 32A(1) above, it shall not allow any transmission of shares or other securities from the Malaysian Register into the Foreign Register.”

16

the shares or other securities of the Company are listed on an Approved Market Place another stock exchange; and

the Company is exempted from compliance with Section 14 of the Central Depositories Act or Section 29 of the Securities Industry (Central Depositories)(Amendment) Act 1998, as the case may be, under the Rules of the Depository in respect of such shares or other securities,

6

7

9

8

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Article 47 - "Subject to any direction to the contrary that may be given by the Company in a general meeting, all new shares or other convertible securities shall, before issue, be offered to such persons as at the date of the offer are entitled to receive notices from the Company of general meetings in proportion, as nearly as the circumstances admit, to the amount of the existing shares or securities to which they are stated in the Record of Depositories as being entitled to. Such offer shall be made by notice specifying the number of shares or securities offered, and limiting a time within which the offer, if not accepted, will be deemed to be declined, and after the expiration of that time, or on the receipt of any intimation from the person to whom the offer is made that he declines to accept the shares or securities offered, the Directors may dispose of those shares or securities in such manner as they think most beneficial to the Company. The Directors may likewise also dispose of any new shares or securities which (by reason of the ratio which the new shares or securities bear to shares or securities held by persons entitled to an offer of new shares or securities) cannot, in the opinion of the Directors, be conveniently offered in the manner provided under this Article."

Article 55 - "... every notice convening meetings shall specify the place, the day and the hour of the meeting and shall be given to all Members at least fourteen (14) days before the meeting or at least twenty one (21) days before the meeting where any special resolution is to be proposed or where it is an annual general meeting. Any notice of a meeting called to consider special business shall be accompanied by a statement regarding the effect of any proposed resolution in respect of such special business. At least fourteen (14) days' notice or twenty-one (21) days' notice (in the case where any special resolution is proposed or where it is an annual general meeting) of every such meeting shall be given by advertisement in at least one (1) nationally circulated Bahasa Malaysia or English daily newspaper and in writing to the Exchange upon which the Company is listed."

Article 56 - "Where shares in the Company are Deposited Securities, the Company shall request the Central Depository in accordance with the Rules, to issue a Record of Depositors to whom notices of general meetings shall be given by the Company."

Article 57 - "The Company shall also request the Central Bursa Depository in accordance with the Rules, to issue a Record of Depositors, as at the latest date which is reasonably practicable which shall in any event be not less than three (3) market days or such other period as may be prescribed by the Central Depositories Act and/or the Rules before the general meeting (hereinafter referred to as "the General Meeting Record of Depositors")."

To amend the existing Article 56 - Notice of meeting to Depositors on Record of Depositors

To amend the existing Article 57 - Depositors on the General Meeting

To amend the existing Article 55 - Notice of meeting

To amend the existing Article 47 - Offer of unissued original shares and new shares

10

To amend the existing Article 58 – Record of Depositors eligible to be present and vote

11 To amend the existing Article 69 - Voting

12

To amend the existing Article 80 – Number of Directors

13

To amend the existing Article 83 – Notice of candidate for election as Director

Article 58 - "Subject to the Securities Industry (Central Depositories) (Foreign Ownership) Regulations, 1996 (where applicable) and notwithstanding any provision in the Act, a Depositor shall not be regarded as a Member entitled to attend any general meeting and to speak and vote thereat unless his name appears in the General Meeting Record of Depositors."

Article 69 - "... at meetings of Members or classes of Members, each Member entitled to vote may vote in person or by proxy or by attorney or duly authorized representative, and on a resolution to be decided on a show of hands, a holder of ordinary shares or preference shares who is personally present or by proxy or attorney or representative of a Member appointed under these Articles and entitled to vote shall have be entitled to one vote, ..."

Article 83 - "No person not being a retiring Director shall be eligible for election to the office of Director at any general meeting unless some Member intending to propose him for election has, at least eleven (11) clear days before the meeting, left at the Registered Office, a notice in writing duly signed by the nominee giving his consent to the nomination and signifying his candidature for the office, or the intention of such Member to propose him for election provided that in the case of a person recommended by the Directors for election, nine (9) clear days' notice only shall be necessary, and notice of each and every candidature for election to the Board of Directors shall be served on the registered holders of shares at least seven (7) days prior to the meeting at which the election is to take place. The cost of serving the notice as required to propose the election of a Director, where the nomination is made by a member, shall be borne by the member making the nomination. "

Article 80 - "All the Directors of the Company shall be natural persons of full age and Until otherwise determined by general meeting, the number of Directors shall not be less than two (2) nor more than eleven (11) and at least two (2) Directors or one-third (1/3) of the Board of Directors (whichever is higher) are independent, but in the event of any casual vacancy occurring and reducing the numbers of Directors below the aforesaid minimum, the continuing Director or Directors must, except in an emergency, act only for the purpose of increasing the number of Directors to such minimum number or to summon a general meeting of the Company but not for any other purpose within three (3) months. The first ..."

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14 To insert the following new

Article 87A – Removal of Directors

Article 87A – “Where a Director is removed from the office, the Company must forward to the Exchange a copy of any written representations made by the Director in question at the same time as copies of such representations are sent to members of the Company under section 128(3)(b) of the Act, unless copies of such representations need not be sent out by reason of the circumstances specified in section 128(4) of the Act.”

15 To amend the existing

Article 92 – When office of Director deemed vacant

Article 92 – “The office of a Director shall become vacant if the Director :

(a) has a Receiving Order in bankruptcy made against him or he otherwise becomes bankrupt or composition with his creditor generally during his term of office; …

(d) becomes of unsound mind or a person whose person or estate is liable to be dealt with in any way under the law relating to mental disorder during his term of office; …

(h) is absent from more than fifty percent (50%) of the total Board of Directors’ meetings held during a financial year;

(i) is convicted by a court of law, whether within Malaysia or

elsewhere, in relation to the following:

(I) an offence in connection with the promotion, formation or management of a company;

(II) an offence involving fraud or dishonesty or where the conviction involved a finding that he acted fraudulently or dishonestly; or

(III) an offence under the securities laws or the Act.

within a period of five (5) years from the date of conviction or if sentenced to imprisonment, from the date of release from prison, as the case may be.”

For the purpose of subparagraph (h) above, if a Director is appointed after the commencement of a financial year, then only the Board of Directors’ meetings held after his appointment will be taken into account.”

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16 To amend the existing Article 95(1) - Directors’ Borrowing Powers

Article 95(1) – “The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its the Company’s or the subsidiaries’ undertaking, property and uncalled capital or any part thereof and to issue debentures and other securities, whether outright or as security for any debt, liability or obligation of the Company or any related corporation the subsidiaries as may be thought fit.”

17 To amend the existing

Article 117 – Managing/Executive Director

Article 117 – “The Directors may from time to time appoint any one (1) or more of their body to any executive office including the offices of Chief Executive, Managing Director, Deputy Managing Director or Executive Director for such fixed period not exceeding three (3) year and upon such terms as they think fit, and may entrust to and confer upon a Director holding such executive office, any powers exercisable by them as Directors generally as they may think fit pursuant to these Articles for the time being such of the powers exercisable by them under these presents as they may think fit and may confer such object and purposes upon such terms and conditions and with such restrictions as they think expedient, and may from time to time revoke, withdraw, alter or vary all or any of such powers, but subject thereto such Chief Executive, Managing Director, Deputy Managing Director or Executive Director shall be subject to the control of the Board of Directors.”

18 To replace the existing

Article 119 and its sub-title in entirety – Special Position of Directors Holding Executive Office

Article 119 “Managing Director subject to retirement by rotation – A Managing Director shall, while he continues to hold that office, be subject to retirement by rotation and he shall be reckoned as a Director for the purpose of determining the rotation or retirement of Directors or fixing the number of Directors to retire, and he shall, subject to provisions of any contract between him and the Company, be subject to the same provision as to resignation and removal as the other Directors of the Company, and he shall, ipso facto and immediately, cease to be a Managing Director if he ceased to hold the office of Director from any cause.”

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19 To amend the existing

Article 135 – To whom copies of profit and loss account etc, may be sent

Article 135 – “… The interval between the close of a financial year of the Company and the issue of the annual audited accounts and the Directors’ and auditors’ report relating to it shall not exceed six (6) months, unless otherwise approved by the relevant authorities. A copy of each such document in printed form or in compact disc read-only memory format or digital video disc read-only format or in any other format through which images, data, information or other material may be viewed whether electronically or digitally or (including other documents required by law to be annexed thereto) shall together with the notice of the annual general meeting howsoever subject to compliance of the Listing Requirements and any other relevant authorities shall not less than fourteen (14) days before the date of the meeting (or such shorter period as may be agreed in any year of the receipt of notice of the meeting pursuant to Article 153, be sent to every Member of, and to every holder of debentures of the Company. under the provisions of the Act or of these Articles. In the event that the annual report is sent in compact disc read-only memory format or digital video disc read-only format or in such other form of electronic media and a member requires a printed form of such document, the Company shall send such document to the member within four (4) market days from the date of receipt of the member’s request. Notwithstanding the above, the annual audited accounts together with the Directors’ and auditors’ reports shall be filed with the Exchange for public release within four (4) months after the expiry of its financial year. The requisite number of copies of each such …..”

20

Article 154 – “If the Company is wound up, the liquidator may, with the sanction of a special resolution of the Company and any other sanction required by the Act, divide amongst the Members in kind the whole or any part of the assets of the Company (whether they consist of property of the same kind or not) and may for that purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how the division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of any such assets in trustees upon such trusts for the benefit of the contributor as the liquidator, with the like sanction, think fit, but so that no Member shall be compelled to accept any shares or other securities whereon there is any liability.”

To amend the existing Article 154 - Distribution of assets in specie

21

21

To amend the existing Article 160 - Effect of the Listing Requirements

Article 160(1) – “Notwithstanding anything contained in these Articles, if the Act, the Central Depositories Act, the Rules or the Listing Requirements and/or other applicable law prohibit an act being done, the act shall not be done.” Article 160(2) – “Nothing contained in these Articles prevents an act being done that the Act, the Central Depositories Act, the Rules or the Listing Requirements and/or other applicable law require to be done.” Article 160(3) – “If the Act, the Central Depositories Act, the Rules or Listing Requirements and/or other applicable law require an act to be done or not to be done, authority is given for that act to be done or not to be done (as the case may be).” Article 160(4) – “If the Act, the Central Depositories Act, the Rules or the Listing Requirements and/or other applicable law require these Articles to contain a provision and they do not contain such a provision, these Articles are deemed to contain that provision.” Article 160(5) – “If the Act, the Central Depositories Act, the Rules or the Listing Requirements and/or other applicable law require these Articles not to contain a provision and they contain such a provision, these Articles are deemed not to contain that provision.” Article 160(6) – “If any provision of these Articles is or becomes inconsistent with the Act, the Central Depositories Act, the Rules or the Listing Requirements and/or other applicable law, these Articles are deemed not to contain that provision to the extent of the inconsistency.” Article 160(7) – “For the purpose of this Article, unless the context otherwise requires, “Listing Requirements” means “The Listing Requirements of Kuala Lumpur Stock Exchange the Exchange including any amendment to the Listing Requirements that may be made from time to time.”

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APPENDIX III

EXTRACT OF THE NOTICE OF THIRD ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that Third General Meeting of the Company will be held at Sri Banang

2, 2nd Floor, Mutiara Hotel, Jalan Dato Sulaiman, Taman Century, K.B. No. 779, 80990 Johor

Bahru, Johor on Friday, 22 June 2007 at 11.00 a.m. for the purpose of considering, and if thought fit,

passing the following resolutions, with or without any modifications:-

ORDINARY RESOLUTION

• Proposed Shareholders’ Renewal of Existing Shareholders’ Mandate for Recurrent

Related Party Transactions of a Revenue or Trading Nature

(a) the conclusion of the annual general meeting of the Company following the general

meeting at which the Proposed Renewal of Shareholders’ Mandate was passed, at which

time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; or

(b)

23

(c) revoked or varied by resolution passed by the shareholders in a general meeting,

whichever is the earlier;

AND THAT the Directors and/or any of them be and are hereby authorized to complete and do all such acts and things (including executing such documents as may be required) to give effect to the Proposed Renewal of Shareholders' Mandate."

"THAT pursuant to paragraph 10.09 of the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given for the renewal of the shareholders' mandate for the Company and its subsidiaries ("GCB Group") to enter into and to give effect to specified recurrent related party transactions of a revenue or trading nature and with the Related Parties as stated in Section 2.1(C) of the Circular to Shareholders dated 31 May 2007, which are necessary for its day-to-day operations, to be entered into by the GCB Group on the basis that these transactions are entered into on terms which are not more favorable to the Related Parties involved than generally available to the public and are not detrimental to the minority shareholders of the Company (hereinafter referred to as the "Proposed Renewal of Shareholders' Mandate");

THAT the Proposed Renewal of Shareholders' Mandate is subject to annual renewal. In this respect, any authority conferred by the Proposed Renewal of Shareholders' Mandate shall only continue to be in force until:-

the expiration of the period within which the annual general meeting after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 ("the Act") (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

SPECIAL RESOLUTION

• Proposed Amendments to the Articles of Association of the Company “THAT the Articles of Association of the Company be and are hereby amended in the manner as set out in Appendix II of the Circular to Shareholders dated 31 May 2007 (“Proposed Amendments”) AND THAT the Directors and Company Secretary be and are hereby authorized to sign, do and execute all relevant documents, acts and things as may be required for or in connection with and to give effect to the Proposed Amendments with full power to assent to any conditions, modifications, variations and/or amendments as they may consider necessary or expedient”

BY ORDER OF THE BOARD

Pang Kah Man (MIA 18831) Secretary

Muar, Johor 31 May 2007

Notes:

1.

2.

3.

4.

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A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

Where a member appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.

The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing. If the appointor is a corporation, the instrument must be executed under its Common Seal or under the hand of an attorney so authorised.

The Form of Proxy must be duly completed and deposited at the Registered Office of the Company at 8 (1st Floor), Jalan Pesta 1/1, Taman Tun Dr. Ismail 1, Jalan Bakri, 84000 Muar, Johor not less than 48 hours before the time set for holding of the meeting or any adjournment thereof.

Please indicate with a "x" in the spaces provided whether you wish your votes to be cast for or against the resolutions. In the absence of specific instructions, your proxy will vote or abstain as he/she thinks fit

Dated this ........................................ day of............................................. 2007

....................................................................... Signature of Shareholder or Common Seal

Notes :1.

2.

3.

4.

PROXY FORMNo of shares held

I/We, .................................................................................................................................................................................................

of ......................................................................................................................................................................................................

being a member/members of GUAN CHONG BERHAD, hereby appoint .......................................................................................

..........................................................................................................................................................................................................

of ......................................................................................................................................................................................................

or failing him/her,...............................................................................................................................................................................

of ......................................................................................................................................................................................................

as my/our proxy to vote for me/us on my/our behalf at the Third Annual General Meeting of the Company to be held at Sri Banang 2, 2nd Floor, Mutiara Hotel, Jalan Dato Sulaiman, Taman Century, K.B. No. 779, 80990 Johor Bahru, Johor on Friday, 22 June 2007 at 11.00 a.m and at any adjournment thereof in respect of my/our shareholding in the manner indicated below :-

B E R H A D

GUAN CHONG BERHAD (646226-K) (Incorporated in Malaysia)

No. Ordinary Resolution For Against

1

2

3 -

4 Re-election of Tay Hoe Lian as Director

5 Re-election of Hia Cheng as Director

6 Re-appointment of Messrs. SC Lim, Ng & Co. as Auditors

7

8

Proposed Amendments to the Articles of Association of the Company

9

A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

Where a member appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.

The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing. If the appointor is a corporation, the instrument must be executed under its Common Seal or under the hand of an attorney so authorised.

The Form of Proxy must be duly completed and deposited at the Registered Office of the Company at 8 (1st Floor), Jalan Pesta 1/1, Taman Tun Dr. Ismail 1, Jalan Bakri, 84000 Muar, Johor not less than 48 hours before the time set for holding of the meeting or any adjournment thereof.

Adoption of Audited Financial Statements for the financial year ended 31 December 2006 together with the Directors’ and Auditors’ Reports thereon

Approval of Directors’ Fees for the financial year ended 31 December 2006

Declaration of a final tax-exempt dividend of 5.2% for the financial year ended 31 December 2006

Authority for Directors to issue shares pursuant to Section 132D of the Companies Act, 1965

Proposed Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions

Speacial Resolution

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The Company Secretary

Guan Chong Berhad (646226-K)No. 8 (1st Floor), Jalan Pesta 1/1

Taman Tun Dr Ismail 1, Jalan Bakri84000 Muar Johor Darul Takzim

Affix Stamp